Warren Buffett didn’t become one of the world’s wealthiest investors by chasing luxury. He built his fortune through disciplined habits, delayed gratification, and understanding compounding gains. The difference between wealth and poverty often isn’t about income but what you do with what you have.
Buffett’s lifestyle reflects his philosophy. He lives in the same modest Omaha home he bought decades ago, drives practical cars, and avoids unnecessary spending. His approach isn’t about deprivation but understanding value and making intentional choices.
For those struggling financially, the trap isn’t always low income but spending patterns that prevent wealth building. Here are five habits that keep people broke, viewed through Buffett’s time-tested financial principles.
1. Lottery Tickets and Gambling
Buffett emphasizes that the lottery is essentially a tax on people who don’t understand probability. Poor people often spend small amounts regularly on lottery tickets, scratch-offs, or casino visits, hoping for a lucky break. The problem isn’t just the terrible odds, but the mindset they create.
While $20 weekly on lottery tickets might not seem significant, that’s over $1,000 annually that could be used to build an emergency fund or pay down debt. Buffett’s philosophy centers on compounding returns over decades, but gambling does the opposite. It takes money away from productive uses and hands it to an industry designed to take more than it gives. Gambling replaces strategic thinking with magical thinking, teaching people to wait for luck instead of building wealth through consistent saving and investing.
2. Rent-to-Own and Payday Loans
Buffett warns that borrowing at high interest rates can destroy wealth. Poor people frequently turn to rent-to-own furniture stores, payday lenders, or “buy now, pay later” services because they lack cash for immediate needs. These services may seem convenient, but they carry devastating costs.
Rent-to-own agreements can result in paying two or three times the actual cost of items. Payday loans carry interest rates reaching triple digits annually. This is the opposite of how Buffett built wealth. He made compound interest work for him through investments, but high-interest debt makes compound interest work against borrowers with crushing force.
When people pay exorbitant interest, they are essentially transferring future earnings to lenders. Buffett’s principle is straightforward: avoid debt whenever possible, and if you must borrow, ensure the terms are favorable to you.
3. Fast Food and Convenience Purchases
Despite his wealth, Buffett famously chooses simple, inexpensive meals. His trips to McDonald’s were for simple value meal options, even when he was a billionaire. Poor people often fall into the fast food trap because it feels cheaper and easier than cooking at home. The problem is that these small purchases add up quickly and cost significantly more than home-prepared food. In 2025, fast food is no longer cheap and affordable; often, it is just as expensive as sit-down restaurant food.
Spending just $10 daily on fast food equals $3,600 yearly. That money could be used to fund emergency savings, pay off debt, or start an investment habit. Convenience purchases extend beyond food to gas station drinks, vending machine snacks, and coffee shop visits. Each purchase may seem insignificant, but together they drain resources that could be redirected toward wealth-building.
Buffett’s approach emphasizes avoiding unnecessary expenses. The fast food habit keeps people broke because it prioritizes immediate convenience over long-term financial health.
4. Designer Clothes and Fake Status Symbols
Buffett wears simple, practical clothing and drives modest vehicles despite having unlimited resources. Poor people often do the opposite, spending money on designer clothes, expensive shoes, jewelry, and status symbols to project success. Buffett once said that if you buy things you don’t need, soon you’ll have to sell things you do need.
Buying expensive clothes to look successful while having no savings is backwards. Wealthy people understand that real wealth is what you own, not what you wear. Status spending directs money toward depreciating assets that provide no financial return.
A $200 pair of shoes doesn’t generate income or appreciate. People want to feel respected, and visible purchases offer immediate gratification; however, this creates a cycle where individuals stay financially strained while appearing successful. Buffett’s principle is to focus on substance over appearance, building real wealth rather than its illusion.
5. Expensive Phones and Cable Packages
Buffett said you should save first and spend what’s left, not the other way around. Poor people often have the newest smartphones, premium cable packages, and multiple streaming subscriptions, yet they often have virtually no emergency savings. These recurring expenses may seem necessary, but they are usually far more elaborate than necessary.
A flagship smartphone can cost over $1,000, but perfectly functional options exist for a fraction of that price. Premium cable and streaming bundles can easily exceed $100 per month when most people only watch a small percentage of the available content.
Buffett’s foundation for his later wealth was laid by consistently choosing to invest rather than consume when he was young. These technology costs create permanent drains on cash flow. Every month, people spend excessive amounts of money on entertainment that provides no lasting value. Over time, these choices prevent the accumulation of capital needed to build wealth or handle emergencies.
Building Wealth Through Better Choices
Warren Buffett’s financial principles are practical because they’re based on fundamental truths about how wealth is accumulated. Poor people often remain broke not because they don’t earn enough, but because their spending patterns prevent capital accumulation.
Every dollar spent on lottery tickets, high-interest debt, convenience purchases, status symbols, or excessive technology can’t work toward financial success. The path to wealth isn’t complicated, but it requires discipline and delayed gratification.
Buffett’s success came from consistently prioritizing long-term value over short-term pleasure. His frugal habits aren’t about being cheap but understanding that wealth is built by keeping money working for you.
For those struggling financially, changing these five spending patterns won’t create instant wealth, but it will stop the leaks that prevent wealth from ever accumulating. The first step toward building wealth is to stop doing the things that guarantee staying broke. The next step is doing whatever it takes to increase your income.